Editorial: Tax deals don't lead to growth

Offering tax abatements to keep communities in the region or bring them to your city is a good thing. Right? Well, not necessarily -- at least not in the grand scheme of things.

Relocations that netted small- and medium-sized businesses at least $39 million in property tax breaks to move around within the Cleveland and Cincinnati regions largely sent jobs from areas of poverty into more affluent communities, according to a study released last week.

In "Paid to Sprawl: Subsidized Job Flight from Cleveland and Cincinnati," the Washington-based Good Jobs First nonprofit research center reviewed business relocations from 1995 to 2010 in the multi-county regions, finding data on 164 moves that involved an estimated 14,500 workers.

Report authors say the findings show that state officials should consider regional tax-revenue sharing and encourage regional economic-development cooperation to prevent "poaching" of companies between nearby communities. Such moves often transfer job opportunities from cities and areas with high minority populations to less diverse areas and often to sites inaccessible by public transportation, they say.

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"The State of Ohio should use its enabling powers ... to encourage and reward the formation of strong regional systems that deter poaching and promote cooperation," the report says. "The meaningful unit of competition in economic development is a metro area, not a locality."

Cuyahoga County Executive Ed FitzGerald said an anti-poaching agreement has been proposed within the county, which includes Cleveland, to discourage fighting over companies without bringing any real growth in the economy. He hopes the idea takes off and expands elsewhere.

The study's authors also call for an online system that offers complete data on economic development subsidy programs and suggest that businesses receiving breaks in metro areas be required to choose locations reachable by public transportation.

The bulk of the relocations reviewed in the report -- 93 percent accounting for an estimated $39.3 million in abatements -- were between 1996 and 2005.

The study says changes in state policy meant abatement values were not available for 2006 to 2010, but taxes were exempted on at least $37.4 million worth of property.

Report findings show that the city of Cleveland lost 11 businesses while gaining two over the 15-year period. Cincinnati lost 17 and gained 7 from 1996 to 2005.

Even if it's not surprising, we feel this is information is both unfortunate and disappointing.

Not only were jobs simply shifted from one part of the region to another, and not only was tax revenue lost by virtue of the abatements, but millions more taxpayer dollars were -- and continue to be -- spent on new infrastructure and repairs to accommodate the sprawl that followed.

On top of which, as FitzGerald points out, none of that seems to have led to reasonable growth in the local economy -- which, for a number reasons, continues to lag behind that of other metro areas and will likely be one of the last to recover from the recession.

Though we certainly feel that businesses should have the freedom to locate their offices in communities that best suit their needs, we encourage them to heed the report's suggestions and to at least consider the larger, regional impact their decisions may have.

We also would like to see FitzGerald's Cuyahoga County Anti-Poaching Protocol gain traction. Simply put, we feel Northeast Ohio is better off if community leaders work together to attract new businesses to the region instead of compete against each other for businesses that are already here.